Microsoft is investing US$678 million in the expansion of its data center in West Des Moines, Iowa.

The plan, dubbed Project Mountain, was awarded tax benefits and is expected to create 29 new jobs, the board of the Iowa Economic Development Authority said in a statement on Friday.

Other tech companies are also setting up data centers in Iowa. Facebook said in April its data center in Altoona, Iowa, will be its fourth owned and operated data center, and its third in the U.S. The company plans to break ground this summer and expects to begin serving user traffic in 2014. Google opened a data center in Council Bluffs, Iowa, in 2009. In November 2012, it announced that it would expand its data center operations in Iowa, taking the total investment to over $1.1 billion.

Microsoft has run a data center in Iowa to support its operations since 2009. It could not be immediately reached for comment on the proposed investment.

Greater Des Moines Partnership, which focuses on providing resources for moving or expanding a business to Greater Des Moines, said the project was the culmination of a year's collaborative effort by Microsoft, the partnership, the city of West Des Moines and the state of Iowa.

Iowa has been attempting to attract data centers to key cities in the state. Under the state incentives, Microsoft will be eligible to receive up to $20 million in tax credits, including $15 in a sales and use tax refund paid during construction and a $5 million investment tax credit, for completing the $677.6 million capital investment project in West Des Moines.

The project expansion will house servers, networking equipment and office space needed to operate Microsoft's cloud services, Greater Des Moines Partnership said in a statement. Necessary infrastructure improvements to the West Des Moines location requiring additional capital investment will support the expansion, such as fiber and roads, it added.

Microsoft operates a large number of data centers in many parts of the world. For its Windows Azure service, for example, it offers services from data centers in Singapore and Hong Kong in Asia, Ireland and the Netherlands in Europe, and from Illinois, Texas, Virginia and California in the U.S.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com